Corrections Corp. of America Dips After False Staffing Admission

By Sam Mamudi

Shares of Corrections Corporation of America (CXW) are down a fraction today after the company late yesterday admitted to violating its contract with the state of Idaho:

A private company that operates Idaho’s largest prison acknowledged Thursday that its employees falsified nearly 4,800 hours of staffing records over seven months last year in violation of its contract with the state.

The admission by Nashville, Tenn.-based Corrections Corporation of America is the latest in a string of staffing problems alleged or being investigated at the Idaho Correctional Center south of Boise.

Earlier this year, the Idaho Department of Correction asked state police to investigate staffing discrepancies at the lockup.

Corrections Corporation of America confirmed an internal review concluded some employees at the prison falsified the number of hours worked last year, starting in May and running through November.

The watchdog group Private Corrections Institute has a issued scathing statement about Corrections Corp. today, suggesting the latest news may have broader implications:

CCA further said “[t]he unverified hours represent a fraction of the total staffing requirements, and there was no apparent increase in violence or other security incidents during the period in question.” However, unstated was the length of time that understaffing – concealed by falsified staff records – had occurred at the Idaho Correctional, and whether such understaffing had contributed to the excessive violence at the facility that led to the class-action suit filed by the ACLU…

“Based on the findings by the Idaho Department of Correction and CCA’s own admissions, every single jurisdiction that contracts with CCA should conduct an audit to ensure contractual compliance and adequate staffing at facilities operated by the company,” stated Alex Friedmann, president of the Private Corrections Institute, which opposes prison privatization. “CCA has a lengthy track record of understaffing and high staff turnover, resulting in incidents such as riots, assaults and hostage situations that threaten public safety. This is likely the tip of a larger iceberg.”

PCI says Idaho pays CCA $30 million a year, while the AP says the contract is worth $29 million a year.

Earlier this week, Corrections Corp. had seen its stock rise after it announced a $675 million special dividend as part of its conversion to a REIT; through yesterday the stock was up 7% this week.

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